After the global recession of 2008, financial services have been viewed as one of the least trusted industries. With a total of 1.7 billion people who currently lack access to financial services, the current global financial system has proved to be inefficient in multiple aspects. Sub-Saharan Africa accounts for seventeen percent of the global unbanked population. A study made by a PWC analyst, claims that 45% of financial intermediaries like money transfers and stock exchange suffer from serious cybercrimes every year, leaving the public at a financial loss and data exploitation.
Decentralized finance, also known as DeFi, is an alternative to the traditional financial system. DeFi refers to an ecosystem of financial applications that are built on top of public blockchain networks like Conflux, Bitcoin, and Ethereum. This financial system is not controlled by a single person or entity. DeFi aims to create an open-source, permissionless, and transparent financial service ecosystem, which is built to be accessible by everyone and without any central authority. The users will have full control of their assets and will be able to interact with the ecosystem through decentralized apps (DApps) and peer-to-peer like LocalBitcoins or torrent files.
1. Global Access to Financial Services
With decentralized finance, anyone with an internet connection and a smartphone could access these services. There are a variety of limitations that prevent access in the centralized system: Credit history, Lack of citizenship, limitation in status, exorbitant funds required to access financial services, or distance from functioning economies and financial service providers.
2. Unaffected by unstable governance and corruption
In a decentralized financial system, the data is recorded on the blockchain and spread across thousands of nodes, making the potential shutdown of a service a complicated undertaking.
Some countries in Africa with poor and unstable governance, leave its…